Lack of Quality Growth May Signal Trouble on the Horizon

Nov302012

The Bureau of Economic Analysis (BEA) revised its estimate of real gross domestic product (GDP) growth upwards by 0.7 percentage point to 2.7% today. BEA had previously estimated that real GDP grew at an annual rate of 2.0% during the quarter. The 3rd?estimate of 3rd?quarter GDP will be released on December 20, 2012.

The upward revision was driven by growth in private inventories. In the BEA’s prior estimate, the change in private inventories had subtracted 0.1 percentage point from real GDP growth. In the BEA’s current estimate, the change in private inventories contributed 0.8 percentage point to real GDP growth suggesting another potential drag on 4th?quarter growth.